The Coronavirus Disease 2019 (COVID-19) pandemic has played havoc on people’s lives in the United States and the world at large. Disease control, health and safety, and personal protective equipment (PPE) took prime mind space even six months after the first patient was diagnosed with coronavirus symptoms.
It has also thrown business continuity, industries, and market segments out of gear due to social distancing guidelines and supply chain issues. One such sector which has suffered a tremendous loss is the real estate market.
The social and economic impact of COVID-19 on U.S. real estate and property in 2020 was felt thus:
- In the United States, 22 million people lost jobs due to the pandemic by April 25, 2020, and a personal financial crisis looms for many hard-working middle-class Americans.
- Financial hardship meant that tenants struggled with rent payments, broke their leases, and demanded rental waivers, lease term modifications, and concessions due to the outbreak.
- This caused homeowners to face considerable losses in rental income and their cash flow was severely affected. The negative impact of the outbreak contributed to the difficulty in making mortgage payments for many homeowners.
- The pandemic also delayed home inspections. Since these are a must, this postponed home sales or canceled them, regardless of location—whether it was New York, California, Washington, or our very own Maryland.
The data above is proof of how the coronavirus pandemic has resulted in huge losses for homeowners, small businesses, and service providers in Maryland and elsewhere.
Risk assessment studies and business models from Federal and Local Government agencies expect a steep fall in tax collections due to business disruption and this may impact local infrastructure and utility enhancements.
Tough decisions and innovative ways to raise finance to meet healthcare obligations may need to be taken by Public Health Officials at both state and federal levels.
Could there be any positive effects of COVID-19 on real estate? Let us take a look.
1. Increase in home sales
The housing market in the U.S. picked up after May. A monthly report by John Burns revealed that sales of residences spiked up by 55% as many moved to the suburbs. This was the highest peak in sales growth since the last one in 2005. Arizona-based home-builder Taylor Morrison quoted a 95% jump in home sales in June 2020. Many new homeowners still want to let out their old or second home for rent or lease.
2. Shift to suburban locations
The COVID-19 crisis and social distancing rules had confined people to their homes. This made apartment-dwellers realize the importance of green and open spaces. People now want to move out of high-density areas like New York and New Jersey to the suburbs. Miller Samuel Real Estate Consultants reported an increase of 44% in home sales. NY suburbs like Westchester showed an impressive 112%. Fairfield County, Conn showed -73% growth in home and apartment sales.
3. Demand for homes with wellness features
Due to social distancing, there is an increased demand for sanitized flats and homes with office spaces. The “work-at-home” and digital economy culture has brought in the necessity for a third bedroom or office study at home. High-tech housing with extra room for home and office is what people look for now during this pandemic.
4. Increase in personal savings
The rate of personal savings in the U.S. rose to 13.1% in Mid March during the pandemic. This was primarily due to the economic stimulus, student loan relief and renter relief granted by the $2.2 Trillion CARES Act, passed by the Congress. Besides the Coronavirus Aid, Relief, and Economic Security Act, unemployment benefits and lowered mortgage interest rates increased their savings. This plus the choice of remote work prompted more people to rent a new home in the suburbs helping them save vital dollars during this current crisis.
5. Rental income is still steady even though the after-effects of the coronavirus in the health sector are still being felt.
Contrary to popular belief, only a small percentage of tenants moved out due to COVID-19. Market conditions and sentiment have not sharply declined as was feared earlier. People can still make money with home rents during the pandemic. How so? They need to smartly screen renters with the help of an expert property management company to avoid any adverse impact and significant decline in rental incomes.
Why do you need an expert Property Management Company for renting your home?
This economic downturn has forced property owners to accept that they must have a steady inflow of income from the home rentals. This is possible only when you let out your home to a good tenant. Tenants need background screening and credit score checks before the lease. This kind of proactive screening helps to prevent potential non-rent paying or hostile tenants from occupying your home or apartment.
You need an expert property management company to do this screening. Screening tenants for a home is a challenging task. Only expert property management professionals such as ourselves can do this with perfection since we follow these steps.
1. In-depth background check
We sometimes work with a private investigator who checks every aspect of the tenant’s background. Right from the personal to the professional and legal issues, no detail gets missed.
2. Low credit scores are not entertained
Adults must have a credit score of over 620 to rent a home. To offer the highest level of service means that we must filter out prospective tenants with a low credit score. The iron-clad rental agreements also do not allow any other adult to co-sign for a person with a low credit score.
3. Inspection of current home
Professional companies leave no stone unturned in screening the tenant. We even visit the current home of the tenant to inspect it and see for themselves the state of upkeep.
4. Investment in technology
Some property management firms have invested heavily in online video conferencing and virtual tours and other smart applications which help avoid travel and the need to personally meet clients.
Property owners can still make money from rent during the pandemic. They need to find and hire the right Property Management firms to help source the right tenants.
At Moon Ridge Property Management, we manage your home like our own. Our motto is ‘good homes for good people’. That is why we match good homes with good people for rent.
Our goal is simple: we aim to offer the best property management in Central Maryland.
Trust our resilient leadership and let us help you rent your home to people who will take care of it as if it is their own home.